06 Mar 2024

Help for those in debt announced in Spring Budget

Administration charge for debt relief orders is removed

The Chancellor has announced a raft of new measures that will assist those currently struggling with debt.

Charges for debt relief orders – a personal insolvency debt solution for individuals who can't pay their debts – are being removed.

The news of the removal of the debt relief order (DRO) charge was widely welcomed. The number of DROs in the last quarter of 2023 (9,064) was the highest quarterly number since their introduction in 2009.

Here we explain what has been announced and what the changes will mean for those struggling with debt.

Find out more: key announcements from the Spring Budget

Help with debt relief orders

The government is getting rid of the £90 administration fee from 6 April 2024.

It is also increasing the scope of DROs. It is raising the maximum debt value threshold from £30,000 to £50,000 and increasing the maximum value of motor vehicle that an individual can retain, from £2,000 to £4,000.

The Chancellor, Jeremy Hunt, also confirmed that he is doubling the repayment period for budgeting advance loans from 12 months to 24 months. These loans – of between £100 and £812 depending on circumstances – help those already receiving benefits to cover one-off emergency purchases, eg if you're starting a new job or moving home.

This will apply to budgeting advance loans taken from December 2024 onwards.

The government is also providing an additional £500m to expand the Household Support Fund in England from April to September 2024. This provides targeted support to vulnerable households with the cost of essentials such as food and utilities.

Read more: 8 ways to tackle your debt in 2024

How do debt relief orders work?

You'll now be able to qualify for a DRO if:

you owe £50,000 or less
don’t own your own home
have other assets or things of value.

There is no requirement to make payments towards most types of debt included in a DRO, and your creditors can’t force you to settle debts. It usually lasts a year and after that most of your debts will be written off.

Qualifying debts with a DRO include: